Hero Honda witnessed a slight recovery in early trades on Tuesday after the company announced that it has crossed the Rs 5,000 crore (Rs 50 billion) mark in sales turnover in FY 2002-03.

The good news reflected on the scrip's fortunes as it edged up 1.7% to Rs 192 on BSE in early trades. At this point, the scrip was at the day's high. 47,700 Hero Honda shares were traded on the counter on BSE in the first few minutes of trading. The volumes in Hero Honda are notably high in the wake of trading on T+2 settlement being flagged off on BSE and NSE from Tuesday.

The stock has received a battering in the last few trading sessions amid concerns that its vehicle sales figures for March 2003 would turn out poor. The stock fell 16.2% in the last five trading sessions to Rs 188.40 on 31 March 2003 from its close of Rs 224.95 on 24 March 2003.

Analysts' fears over poor vehicle sales for March 2003 manifesting have been confirmed as the company missed targets for FY 2002-03 vehicle sales (1.7 million vehicles). In fact, Hero Honda has failed to meet the revised target, an earlier target was set at 18 lakh units. The company finished the year with total motorcycles sales of 1.67 million recording a growth of 18% over last fiscal year's sales of 1.42 million  units.

Rising cost of fuel , the eyeball-capturing Cricket World Cup and the Holi festival have been primary factors for the sluggish motorcycle sales witnessed in recent months. Analysts also say that bike sales have been affected by weak rural demand which, in turn, is due to a bad monsoon last year.

Analysts expect motorcycle sales to pick up from April 2003 on, what with the harvest season beginning mid-April. It is also reckoned that an increase in fuel prices has a softening effect on demand for two-three months following which sales begin to recover once again.

Yet, growth concerns due to the high base effect may continue to dog the motorcycle sector in the months ahead. It is to be noted that the months of April 2002 and May 2002 had been extremely buoyant and hence y-o-y growth may not be robust in Q1 of FY 2003-04. In Q1 of FY 2002-03, while two-wheeler sales for the top three companies grew by 28% y-o-y, motorcycle sales grew by a robust 56% y-o-y.

On the financial front, Hero Honda said that it has achieved landmark sales turnover of over Rs 5,000 crore (Rs 50 billion) in FY 2002-03 up from last year's turnover of Rs 4539.49 crore (Rs 45.39 billion). The detailed financial figure will be announced post the board meeting in April 2003.

Hero Honda said it has lined up a slew of launches in the next fiscal. The first launch, a 100cc entry-level model, is scheduled in April 2003 to be followed by a premium 200cc plus motorcycle in May 2003. In October 2003, launches of upgraded variants of existing models have been planned.

BSE code: 500182